JC Penney Selloff an Overreaction?

By Ben Levisohn

Yesterday, J.C. Penney (JCP) got whacked when it failed to provide numbers to back up its claim that its customers had “responded well to the Company’s offerings” during the holiday season. Today, JC Penney is rallying after Piper Jaffray defended the stock.

REUTERS

Neely Tamminga and Kayla Berg call yesterday’s 10% selloff an “overreaction” and upgrade its shares to Overweight from Neutral. They write:

We believe the real message in yesterday’s release is being missed: JCP is doing what they said they would do, and we believe any retailer reiterating their guidance following this compressed, promotional, mall-traffic-starved holiday season is a winner in our book. With liquidity concerns largely off the table, we feel more comfortable taking this idea to an Overweight rating for potential upside.

In a note released yesterday, JPMorgan’s Matthew Boss and team call spring “the key.” They write:

Based on our proprietary field work and conversations with management – CEO Ullman and crew are still plugging holes (home liquidation, pricing changes, marketing) with the true underlying run-rate of business undetermined until spring in our view.

In a mixed day for retailers, shares of JC Penney have jumped 5% to $7.72 11:20 a.m., Macy’s (M) has gained 8.1% to $56.01 after reporting strong same-store sales and announcing layoffs, while Kohl’s (KSS) has dipped 0.1% to %55.14 and Sears Holdings (SHLD) has fallen 6.3% to $41.24.

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There are 8 comments

JANUARY 9, 2014 11:47 A.M.

jack potts wrote:

Sell the stock.Do not believe analysts !! Haven't we learned our lesson? It's just a matter of time until there are store closings!

JANUARY 9, 2014 12:06 P.M.

Eric Young wrote:

JCP is absolutely dead 5 days a week and the weekends aren't exactly busy. This stock is going to zip by summer.

JANUARY 9, 2014 12:59 P.M.

Ridiculous wrote:

Or maybe you want the price to plunge so you can get in for cheaper.

JANUARY 9, 2014 1:35 P.M.

SK wrote:

One of the greatest name in America! Much better and impressive than Macy's. This is not a cheeppo like Sears. It is going to stay big!

JANUARY 9, 2014 3:40 P.M.

Jan wrote:

I'm a little confused as to the reaction of the "experts" with their negative response to JCP's choice of words on the holiday sales season.Given the last year's worth of news coming from JCP execs, it would be prudent that they be conservative and choose their words wisely going forward. I think they are. As far as the "death" of JCP; I believe that by refurbishing many of their stores over the past couple years, this can only be a plus; the new look is fresh and clean; it's now comes down to short and long term execution and closing under performers. Phoenix area JCP'S has had very good traffic the last several months (back to last summer); even in the middle of the week. Of course, this is just one metro area.

JANUARY 9, 2014 4:44 P.M.

Sophie wrote:

I have been pleasantly surprised at the recent changes in the store. More quality merchandise, clean and neat stores. Ordered pleated shades from Penneys on line. They were reasonable and high quality. Penneys is on the right track.

JANUARY 9, 2014 5:43 P.M.

toni wrote:

45 year penneys card holder made their biggest mistake by abusing OLD & DEVOTED CUSTOMERS. WHEN THE ECONOMY STARTED TO TANK, JCP raised their interest rates and the stores looked like garbage in & out. I took my business elsewhere and I'm glad I did. the old saying GETTING LESS FOR MORE should be that stores MOTTO !!!!

JANUARY 9, 2014 9:37 P.M.

Ms Michigan wrote:

Penny's did get a little tacky the last couple of years but they turned it around in 2013 and I am back to shopping their and I feel Kohl's has lost it's edge in the market!

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Earnings reports, corporate strategies and analyst insights are all part of what moves stocks, and they’re all covered by the Stocks to Watch blog. We also look at macro issues, investor sentiments and hidden trends that are affecting the market. Stocks to Watch gives you the full picture of the U.S. stock markets, all day long.

The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.